|
Description |
Capital Expenditures |
Revenue Expenditures |
|
Nature of Expense |
Involves significant investments
in assets with long-term benefits, such as buying equipment or property. |
Relates to ongoing operational
costs, like utilities or repairs, which are consumed within the current
accounting period |
|
Duration of Benefits |
Yield benefits over an extended
period, contributing to future revenue generation. |
Provides immediate benefits but is
consumed within the current accounting period |
|
Recording in Financial Statements |
Typically recorded as assets on
the balance sheet and depreciated over time. |
Immediately expensed on the income
statement |
|
Impact on Profitability |
May not impact current
profitability significantly but influences future earnings through
depreciation. |
Directly affects current
profitability as these are immediate expenses. |
|
Examples: |
Building renovations, purchasing
machinery, or acquiring long-term assets. |
Routine maintenance, salaries, and
utility payments |
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